Big Investors Ask Companies about Climate Risk

Big Investors Ask Companies about Climate Risk

    
 
January 2007  - A group of 
institutional investors with assets of US$41 trillion under 
management said today it is asking 2,400 of the world's 
largest companies for disclosure of information about the 
risks and opportunities they face due to climate change. 
This is the fifth such request by the investors participating 
in the Carbon Disclosure Project, CDP. 
The 284 investors say that by these requests for information 
they are "cementing CDP as the global standardized mechanism 
by which companies report their greenhouse gas emissions to 
investors." 
Carbon Disclosure Project Coordinator Paul Dickinson said, 
"The increasing body of evidence confirming climate change is 
accelerating and is linked to human behavior, makes it clearer 
than ever that investors and other stakeholders require 
standardized information regarding the business risks and 
opportunities presented to corporations by climate change." 
This fifth request, on behalf of $41 trillion assets under 
management, represents more than one third of total global 
invested assets and is up from the investors with $4.5 
trillion under management who participated in the first CDP 
request in 2002. 
Based on the results of the previous four requests for such 
information, the CDP now hosts the largest registry of 
corporate greenhouse gas data in the world at 
www.cdproject.net. 
Paul Dickinson is coordinator of the Carbon Disclosure 
Project. (Photo courtesy UNEP) 
"Given CDP is the largest source of such information, with 960 
corporations answering CDP questions last year," said 
Dickinson, "we are delighted to help the investment community 
once again secure updated information in a comparable format 
that adds value for them, via a single-request mechanism that 
is efficient for the corporations." 
The request for information has been sent to 500 of the 
largest companies globally, as listed in the Financial Times 
500, the FT500, as well as 500 of the largest publicly traded 
companies in the United States, as listed in the Standard and 
Poor's 500, the S&P 500. 
The largest companies in the world's industrialized nations 
are being queried, as well as 250 of the largest electric 
utilities globally, and 100 of the largest companies in the 
transport sector globally. 
But a report released in Boston today based on responses of 
the S&P 500 companies to last year's Carbon Disclosure Project 
questionnaire concludes that over half are doing a poor job of 
disclosing climate change risks to their investors. 
The Ceres/Calvert report concludes that America’s largest 
companies still are not taking climate change seriously 
enough. 
Less than half, 47 percent, of the S&P 500 companies responded 
to the CDP questionnaire, the Ceres/Calvert report shows, and 
those that did respond failed to provide much of the 
information investors are seeking. Thirty percent of the 
responders declined to publicly release their responses, 
calling them "confidential." 
"Many U.S. companies are still downplaying climate change and 
its far-reaching business impacts," said Mindy Lubber, 
president of Ceres, a coalition of investors, environmental 
groups and other public interest organizations. 
Mindy Lubber is president of Ceres. She also directs the 
Investor Network on Climate Risk, an alliance that coordinates 
U.S. investor responses to the financial risks and 
opportunities posed by climate change. (Photo courtesy Ceres) 
"More extreme weather events, regulatory changes and growing 
global demand for climate-friendly technologies are just a few 
of the ways that climate change will ripple across all sectors 
of the economy. Yet, many U.S. companies are not addressing 
these trends and are leaving investors in the dark about their 
strategies for mitigating those risks," Lubber said. 
"All companies have a duty to provide shareholders with more 
analysis and disclosure on climate risks and their strategies 
for managing or mitigating those risks," said Dr. Julie Fox 
Gorte, vice president and chief social investment strategist 
at Calvert, an asset management company that offers socially 
responsible mutual funds. 
Dr. Julie Fox Gorte, vice president and chief social 
investment strategist at Calvert (Photo courtesy Calvert) 
Poor survey responses among lower-emitting companies - in 
particular, retailers, banks and insurers - was especially 
conspicuous, the Ceres/Calvert report shows. 
Many companies in these sectors provide insufficient climate 
disclosure to investors, even after suffering large financial 
losses from climate-related events, such as the 2005 
hurricanes. 
Lubber said that all companies should disclose their risks 
using the three most common disclosure mechanisms - SEC 
filings, the CDP, and sustainability reports using Global 
Reporting Initiative guidelines. 
"This report underscores the need for the SEC [Securities and 
Exchange Commission] to take action to include climate risk as 
part of their ‘materiality’ standard for corporate reporting, 
and for the companies of the S&P 500 to take heed," said 
Howard Rifkin, deputy treasurer for the state of Connecticut. 
The Ceres/Calvert analysis of responses by the U.S. companies 
in the S&P 500 showed that 80 percent of the 228 companies 
that responded to the survey addressed the need to reduce 
greenhouse gas emissions, but only one in four of them, 
disclosed measurable emissions reductions targets and specific 
time frames for reductions. 
Nearly 75 percent of the responding companies acknowledged 
bottom-line risks associated with extreme weather events such 
as hurricanes, fires and floods. However, very few of the 
companies surveyed link more extreme weather to climate 
change. Fewer still, only four percent, disclosed strategies 
for mitigating and adapting to the growing physical impacts 
from climate change, the Ceres/Calvert report shows. 
The Carbon Disclosure Project request to corporations focuses 
on regulatory risks and opportunities, such as limits on 
greenhouse gas emissions. It covers total company-wide global 
greenhouse gas emissions, and steps taken to manage and reduce 
emissions. 
The investors' group also is requesting information on 
physical risks and opportunities, such as changes in weather 
patterns that might impact operations of the responding 
companies. 
Finally, the investors are interested in how consumers 
perceive the reporting companies - their reputations. 
CDP says it has developed these questions together with 
signatory investors, recipient corporations and other experts. 

Responses are requested within four months. Corporations that 
previously provided responses are invited to report progress. 
Companies that previously did not respond are requested to do 
so, or to provide a reason why they do not believe the request 
is relevant to their business. 
The information received will be summarized in regional and 
sector reports and distributed to participating institutional 
investors and responding corporations. 
These reports will be made publicly available at 
www.cdproject.net from September 2007. 
Last year, 72 percent of the FT500 answered the Carbon 
Disclosure Project questionnair and these responses along with 
reports analyzing them can be downloaded without charge at 
www.cdproject.net 
This initiative has been coordinated by the Carbon Disclosure 
Project, a special project of Rockefeller Philanthropy 
Advisors in New York.